Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
Closely held stock 75/76% in tight hands - from company share registrar. Once Lombard are through with selling their 1.65% stake from March 23 (if they want to sell it all), this should move fast.
Lombard were down to 1.65% at 23 March, Monday will be 4 weeks on from that. Valuation seems wrong at GBP25m given that they are working “day and night” as part of the Ventilator consortium and have received orders of more than £5m so far for the NHS. Should be a pivotal year for the business. It was the US business that made positive revenue growth last year. UK domestic business clearly thriving now. Financials were reported April 30 last year so we should hear something soon if we don’t hear anything else in the meantime around ventilator orders.
Working off the company website share registrar from March 2019 and reviewing holdings RNSs, the following are shareholders:
IKO Enterprises: 14.77% (increasing before and since new board)
Ninety One UK: 11.43%
JP Morgan: 10.85% (NEW)
Investec: 9.96%
Aberforth: 6.55% (NEW)
Goldman Sachs: 5.76% (NEW, small decrease recently)
Greater Manchester Fund: 5.81% (small decrease)
Templeton: 4.96%
Blackrock: 4.94%
Artemis: 4.87%
Massachusetts: 4.53%
Schroder: 3.89%
Norges: 3.37% (small increase recently)
Total: 91.69%
Clearly more have been selling, but encouraging that so many institutional investors back the new board and company post Covid!
This point is really relevant and particularly relevant with respect to the UK and Germany where the majority of their revenue comes from. Look at the UK government budget - massive infrastructure spend, biggest in a generation. A big boost for the sector mid-term.
Get it, but this negative sentiment is what is creating some of the opportunities. I’m bullish mid-term. Central banks v accommodative. May could still be ups and downs but I think global equities rally into the summer as we get to business - boosted by the banks. Unlikely to catch the bottoms but scaling in at these sort of prices makes sense for me in this sector.
From the trading update at year end:
Disposals and balance sheet
Further reductions in levels of working capital have helped the Group to reduce its net debt at 31 December 2019 to c.£162m (2018: £189m), with debt factoring also reduced to c.£26m at the year end (2018: £50m).
The announced disposals of the Group's Air Handling division and its Building Solutions business will generate c.£204m of net proceeds and complete the transition to a robust balance sheet, delivering a net cash position on a pro forma basis and provide flexibility for increased investment and returns to shareholders. Following receipt of shareholder approval, the disposal of the Air Handling Division is now expected to complete later this month, with the disposal of the Group's Building Solutions business also expected to complete during the first quarter, subject to competition clearances.
These disposals enable the Group to focus on its leading positions as a specialist distributor of insulation and interiors products which operates in seven countries across Europe and a merchant of roofing and exteriors products in the UK and France.
Following completion of these disposals, the Group intends to terminate its remaining debt factoring arrangements and to target headline financial leverage, pre IFRS 16, of approximately 0.5x EBITDA (31 December 2018: 1.8x).
Quite like this quote from advfn: “ I get there has been management change, but odd that the Chairman, CEO and FD all bought shares at £1+ over the last 18 months, and meaningful amounts. Yes - the business has run into problems even prior to CV, but typically you don't purchase stock like that if you look in and see a total dog mess.”
Hmm .. would help the personal P&L! It hasn’t seen any Covid bounce unlike many others. JP Morgan see value, expect other institutional investors will too. With no material change, I expect a bounce - 50/60p would still be 50% of valuation from early Feb - crazy drop!
The drop is way overdone. £106m market cap now. Cash £135m as it stands. Some debt too of course, but importantly no danger of breaching covenants. Measures taken to save costs during crisis and measures taken in 2019 to reduce debt and increase margins leave them with a strong balance sheet. Measures will be taken in the next 2-3 weeks to get back to business in the Uk and Europe. JP Morgan’s 10% stake also gives confidence.
Would be great to understand whether the “exceptional volumes” referred to in the RNS of March 24th will have a positive impact on free cash flow generation and ultimately the balance sheet. When do people expect to receive a financial update from the group?
Valued at £70m. .. moves are amplified given few shares in circulation. Bought heavily in the 500s (and plenty higher too!), looking ahead to the financials next week and signs of OPEC becoming uneasy at the price. Comforted by Chairman owning close to 30% and the large cash pile.
900p is actually £120m cap